7 November 2003

Dear Sir / Madam,

Review of Regulatory Reporting

Further to the issuance of the revised set of regulatory returns and completion instructions in November 2002, I am writing to inform you of some relatively minor enhancements made to reflect recent developments.

In view of the different reporting treatments currently adopted by authorized institutions in respect of revaluation and impairment, we have added two additional items for the reporting of deficit/surplus on revaluation of land and buildings and impairment loss (and reversals) on assets in the Return of Current Year’s Profit and Loss Account (MA(BS)1C).

The amendments will take effect, together with all the other previously finalised return amendments, for the positions as of March 2004. Prior discussion with the Working Group on Regulatory Reporting, which includes representatives from the Hong Kong Association of Banks, the Deposit-taking Companies Association and the Hong Kong Society of Accountants, suggests that authorized institutions should have no major difficulty in making these changes.

The opportunity has also been taken to update the completion instructions to the Return of Capital Adequacy Ratio (MA(BS)3) to take account of the requirements set out in relevant modules of the Supervisory Policy Manual issued over the past two years.

The detailed amendments are shaded and in bold italics in the attached revised returns and completion instructions, and are accompanied by a summary of changes for each of the returns. If you have any questions, please feel free to contact Ms Tess Leung at 2878-8279 or Ms Kennis Hui at 2878-8228.

Yours faithfully,

Michelle Quek
Head, Banking Policy